Titan Machinery, a construction and agricultural equipment dealer with a growing rental program, increased revenue to $588.0 million in its fiscal 2014 third quarter ended Oct. 31, compared to revenue of $582.1 million in the third quarter last year. All four of the company’s revenue sources — equipment, parts, service, and rental and other — contributed to this period-over-period revenue growth.
“In the third quarter, our higher margin parts and services business performed well but was offset by lower agriculture equipment sales and lower equipment margins due to pricing pressure in both industries,” said David Meyer, Titan Machinery’s chairman and CEO. “We are making progress with our construction initiatives and are optimistic about the long-term potential of this segment, but it is taking longer than we expected for this to translate into improved financial results given the current challenges in this industry.”
Rental revenue and other increased to $24.7 million for the third quarter of fiscal 2014 from $20.5 million in the third quarter last year, a 20.5-percent increase.
“Third-quarter housing permits throughout the majority of our footprint are up year-over-year, which is an early indicator of demand for our medium and light equipment product offerings,” Meyer said. “We continue to see growth in rental equipment demand, which is aligned with industry forecast.”
Though the company grew rental revenue on a quarter-over-quarter basis because of its expanded rental fleet, it experienced lower utilization compared to the prior year, chief financial and accounting officer Mark Kalvoda told investors on the Q3 conference call.
Gross profit for the third quarter of fiscal 2014 was $93.6 million, compared to $94.1 million in the third quarter last year. The company’s gross profit margin was 15.9 percent in the third quarter of fiscal 2014, compared to 16.2 percent in the third quarter last year.
For the nine months ended Oct. 31, revenue increased 7.3 percent to $1.52 billion from $1.41 billion for the same period last year. Gross profit margin for the first nine months of fiscal 2014 was 16.5 percent, compared to 16.6 percent in the same period last year.
“Based on our year-to-date results and the various headwinds we are facing, we are reducing our revenue, net income, and earnings per share expectations for fiscal 2014,” said Meyer. “While we are not satisfied with the recent performance of our business, we remain confident in our long-term success given our proven operating model including our higher margin parts and service business. We expect to generate positive cash flow from operations as our inventory levels decline. Looking ahead, we will continue to focus on managing the controllable aspects of our business, including taking steps to reduce our inventory levels, which will help drive strong cash flow in coming quarters and enable us to navigate macroeconomic and industry headwinds and better position us for future opportunities.”
For the full year ending Jan. 31, 2014, the company now expects revenue to be in the range of $2.15 billion to $2.35 billion compared to the previous range of $2.25 billion to $2.45 billion.
Based in West Fargo, N.D., Titan Machinery is No. 36 on the RER 100.